All About Greece 07-02-15

Most market action over this past week was easily explained by the latest headline from Greece. On Monday, for example, government bond yields fell and bond prices rose as investors sought safety after Greece defaulted on its payment to the International Monetary Fund (IMF) and the European Central Bank (ECB) capped the level of emergency funds it would infuse into the Greek banking system.

Today, banks in Greece are closed again, and they will remain shuttered until at least July 6, a day after Greek voters will go to the polls to vote whether or not to accept new austerity measures proposed by the country’s international creditors. In anticipation of a bank run, the Mediterranean nation imposed capital controls. Read more about All About Greece 07-02-15

Hail the Consumer 06-25-15

The U.S. economy slowly continues to improve, as indicated by today’s data on new unemployment claims, which for the 16th consecutive week have held at less than 300,000. In other words, a tighter labor market is in place for the second half of the year, and this should help growth to accelerate. While jobless claims did rise by 3,000 to 271,000 in the week ended June 20, economists generally had expected a higher number of new claims, and the number of layoffs continues to remain low overall.

In concert with better hiring, meanwhile, household spending increased during May by the highest level in nearly six years, according to figures the U.S. Department of Commerce released today. Consumer purchases rose by 0.9 percent in May, following a mere 0.1 percent increase in April. Economists speculated that Americans may at long last have started to divert some of their savings from lower gas prices into additional consumer purchases. Read more about Hail the Consumer 06-25-15

Fed Patience Is a Virtue 06-18-15

The U.S. markets took encouragement from the latest Federal Open Market Committee meeting results: the Fed didn’t move to raise rates (as was widely expected) and, while policymakers commented on the improving economy, they also added comments dovish enough to prompt more economists to believe (as we do) that the Fed will further delay the rate increase.
Read more about Fed Patience Is a Virtue 06-18-15

Growth Is Still an Issue 06-11-15

The World Bank yesterday joined a chorus of international financial authorities, including the International Monetary Fund, that now urge the U.S. central bank to wait until 2016 to increase interest rates.

Just like the IMF last week, their concern is the U.S. growth. And the bank’s newly released semiannual global economic forecast calls for slower world growth. Raising rates too soon could further strengthen the U.S. dollar, and in turn slow the U.S. economy and deal a blow to emerging and developing countries, where growth has already stumbled.

The World Bank pointedly lowered its forecast for 2015 U.S. growth to 2.7 percent, from 3.2 percent in January and its U.S. expectations for 2016 to 2.8 percent, down from 3 percent. This warning, by way of numbers, followed a similar caution from the IMF last week, when, as we reported to you, it asked the Fed to hold off on raising U.S. rates unless growth and inflation unexpectedly rise before then. Read more about Growth Is Still an Issue 06-11-15

Good News from Lowe’s and a Big Pipeline Deal 06-04-15

Following the example of the stock market, the size of deals in the U.S. – brought on by record-low interest rates, improving optimism and, yes, record-high stock prices – has also hit a new record in the month of May.

The monthly U.S. M&A total in May, calculated to be a whopping $243 billion, has surpassed the two previous highs, set in the dotcom era ($213 billion in January 2000) and in the debt boom ($226 billion in May of 2007).

And the fervent activity continues into June. The June 1st deal proposed by one of the largest U.S. pipeline companies Enterprise Product Partners LP (EPD) won’t be counted in that May total, but it’s a good start for the new month. For $2.15 billion, Enterprise will buy an Eagle Ford pipeline and processing company (from Pioneer Natural Resources and Reliance Industries). Read more about Good News from Lowe’s and a Big Pipeline Deal 06-04-15